Confirmation Sears is circling the drain

[widebody911]

So, does it swirl clockwise or counter-clockwise?

Sears reveals 'substantial' doubts about future, shares plunge 11%

[Rick Lee]

I had a issue with them a year or so ago. They couldn't figure out how to refund the $80 or so to my Sears gift card when I had to return a microwave door that didn't fit, due to their cust. service guy giving me an incompatible part #, but assuring me it would work. I called them and was promised many times that it would be fixed and they'd call me the next day to confirm. I finally lost it and went to LinkedIn to find the VP in charge of this stuff. I found her and it turns out we have 62 mutual connections. I figured out her email address and sent her a note, asking her to fix this. Wow. Next morning at 7am I got a call, begging for forgiveness, assuring me it would be fixed within the hour and they'd call again to confirm, which they did. I still don't want to deal with them again and, frankly, already have everything I could ever want that's available at the local Craftsman store.

[asphaltgambler]

I'll repeat what I believe is going on - there is no doubt the current and past CEO's running the business into the ground to glean the real estate holdings or personally profiting from the sale of the Sear's brands on either the front or back end or some other gain. If it doesn't make sense - its nonsense.

Interestingly a post prior stated - Amazon's business model is taken straight from the Sears playbook albeit with a modern twist. Sad but their demise started in the early 60's with too much diversification, loosing focus on their core business while failing to update and modernize the brick and mortar.

[flatbutt]

The retail apocalypse has officially descended on America

[wdfifteen]

Originally Posted by asphaltgambler

I'll repeat what I believe is going on - there is no doubt the current and past CEO's running the business into the ground to glean the real estate holdings or personally profiting from the sale of the Sear's brands on either the front or back end or some other gain.

Short term profit taking by PE raiders has hastened the demise of many US businesses. They begin by getting control, and they start picking the bones of companies that might have survived if the raiders had been real investors instead of grave robbers.

[GG Allin]

The Sears by me (Golfmill, Niles IL.) seems to be doing fine every time I go there. It'd be a shame to see them go away.

They also have a fantastic scratch and dent outlet nearby. I pretty much exclusively buy my appliances there.

[intakexhaust]

Originally Posted by GG Allin

The Sears by me (Golfmill, Niles IL.) seems to be doing fine every time I go there. It'd be a shame to see them go away.

They also have a fantastic scratch and dent outlet nearby. I pretty much exclusively buy my appliances there.

Wouldn't it be a hoot to have Sears one up Amazon and deliver Kenmore appliances by giant drone's. And a two-for.... imagine the entertainment that would give all

[intakexhaust]

The entire retail marketplace has got to be brutal. The dog eat dog of all time.

Just for anyone with a basic observation, consider when the big box stores broke ground on the outskirts of Mainstreet, Anytown USA. Wrecked many of small town stores. Then they became the anchor for other chains. But.... ffwd and those anchor stores are shutting down, leaving the others clinging on hoping for the flow of customers.

Even note the numerous Walmarts that shuttered older stores, only to move a few miles further and build Super Centers. Many of those old Walmart structures have been abandoned for years.

Then along comes the online model of Amazon of which has demolished the way we've been accustomed to shopping. But.... they too now are starting to build -brick and mortar storefronts.

[JavaBrewer]

I live very close to a large indoor shopping mall. It is anchored by Sears, Macys, Nordstrom, Target, and JCPenny. If I were to guess Sears and JCPenny are hanging on by a thread. The others appear to be very busy. The Target also has a grocery store and is what brings me there 2x a month. The mall appears to be in a transition as chain restaurants and entertainment are gaining a foothold vs. traditional shopping.

I was last in Sears late in 2016 to pickup a propane conversion part for our dryer (Samsung) that I purchased online. The store looked a mess, as if the product display manager (if that is the right term) quit months ago. Nothing was where you would expect and many shelves were stocked cheap looking stuff. Lots of empty spaces.

[intakexhaust]

Its getting laughable but really sickening seeing whats happening to the retail industry and the damage done.

All the name brands whole-goods made and coming in from Asia, India, etc. are now getting so flooded that its becoming close to free. Take clothing for example. The big box stores can't afford the shelf space for last years clothing or seasonal so you can now buy at special sections to stand alone outlets for pittance. Example is TJMaxx, Kohls, Meijer's or even Walmart discount racks selling casual dress shirts, pants, shorts for $1 to $5. Cheap as rags for working on and wiping oil up under the old 911- lol There's piles of lots in other items, 50 cents to only a few bucks. Items that had msrp at $10 to $30!

Other imports have saturated markets such as electronics. Decent HDTV's for $100 to $275, the larger screens 4k res. for $500. The only thing profitable are the phone packaging by contracts.

1) The separation of class of who's going to afford to buy for the US producers is going to be the challenge. Its going to narrow the customer base.

2) How much more will the US take for unfair balance in trade?

3) On the brick and mortar situation -Anytown USA. Jobs and loss of re-investment, tax, etc.

4) How convenient will online buying really sustain? Right now my wife complains about almost every time a pair of shoes or attire comes in from Amazon, they don't fit or have some defect. Whats a small amount of savings truly worth? That means PITA returns, more time consuming than actually going to a store to sample and inspect, fit and purchase.

My thinking, Amazon is going to home in on having many real storefronts plus maintain the dominance online.

[intakexhaust]

Originally Posted by JavaBrewer

I live very close to a large indoor shopping mall. It is anchored by Sears, Macys, Nordstrom, Target, and JCPenny. If I were to guess Sears and JCPenny are hanging on by a thread. The others appear to be very busy. The Target also has a grocery store and is what brings me there 2x a month. The mall appears to be in a transition as chain restaurants and entertainment are gaining a foothold vs. traditional shopping.

I was last in Sears late in 2016 to pickup a propane conversion part for our dryer (Samsung) that I purchased online. The store looked a mess, as if the product display manager (if that is the right term) quit months ago. Nothing was where you would expect and many shelves were stocked cheap looking stuff. Lots of empty spaces.

I'm surprised by the comment of Sears in Niles, IL. Maybe the only ones with something good. Chicago is hometown to Sears and far as I'm concerned, rate pretty bad.

Clearance and discount prices are actually starting sale prices at competitors. Selection is sub-par.... understandable at this point. Its over.

Its no secret all retailers are pinched. But one I've watched is Kohls. They've taken the direction of dropping designer name in volume suppliers and taken more on under their own labels.

Essentially, their name brand quality of clothing is lower but they've created this illusion as better by jacking the retail tag very high and then using a markdown. The markdown puts it at a price level of what the recognized designers are. So they've sunk even further and quarterly reports show it.

But, Kohls has areas where they blow out the volume of clothing, and those last inventories of recognized labels. Again, its the $5 racks of shirts, pants, shorts. Jackets for $15, etc..

[intakexhaust]

JCP just a few years back was in a huge nosedive and they ousted the CEO. They did a turnaround with a different sales strategy, store revamp and earned some decent Christmas seasons. But apparently its not enough to sustain. BTW: Their online program presence is poorly written and not smooth.

Also, last year they attempted to get into the appliance market. Goofy as hell pricing. Way out of whack high. Curious if the board was looking to take the slack from Sears for the appliance market.

Another in a losing battle.

[legion]

1) I think the current CEO of Sears has sunk hundreds of millions of his own money to keep them afloat. Unless Sears comes up with a radically different strategy than every other department store, they are done for. They currently have a strategy that is half a century out of date, and poorly-executed at that.

2) Our local mall is anchored by JC Penney, Macy's, Sears, and Bergners. The Macy's and JC Penney are in the process of closing. I'm surprised that the Sears is still there. I really think by the next Christmas just Berner's will remain.

[DanielDudley]

Not only is Sears dead, But Macy's and about half of the Mall is empty. As in no longer occupied. JC Penny's too.

[intakexhaust]

Originally Posted by legion

1) I think the current CEO of Sears has sunk hundreds of millions of his own money to keep them afloat. Unless Sears comes up with a radically different strategy than every other department store, they are done for. They currently have a strategy that is half a century out of date, and poorly-executed at that.

2) Our local mall is anchored by JC Penney, Macy's, Sears, and Bergners. The Macy's and JC Penney are in the process of closing. I'm surprised that the Sears is still there. I really think by the next Christmas just Berner's will remain.

haha, Legion-

I've twice taken the granddaughters to that mall you're referring. Most of the woman sport the same cropped and bobbed haircut. Predictable and so when a few say no to a store, the rest follow in short order.

[MBAtarga]

Originally Posted by legion

1) I think the current CEO of Sears has sunk hundreds of millions of his own money to keep them afloat. Unless Sears comes up with a radically different strategy than every other department store, they are done for. They currently have a strategy that is half a century out of date, and poorly-executed at that.

In summary - Lampart has been funding expenses by loaning Sears (at high interest rates) using Sears real estate as collatoral.

How Sears CEO Lampert cashes in as stores cash out

Here's how Lampert has retained assets even as Sears has shriveled:

•Lands' End: Sears spun off retailer Lands’ End in 2014, but Lampert's hedge fund owns 59% of the company. That stake was worth nearly $360 million as of Wednesday morning.

•Real estate: Sears sold 235 store properties and its interest in another 31 properties to a newly formed real estate investment trust (REIT) called Seritage Growth Properties for $2.7 billion in 2015. The deal gave Seritage control of some of Sears’ best properties in a sale-leaseback transaction. Lampert’s ESL owns 43.5% of the limited partnership units of Seritage and 7.9% of the REIT’s voting power.

•Real estate collateral: Entities affiliated with Lampert's hedge fund extended $500 million in credit to Sears in January, secured by at least 46 Sears properties and possibly more. That means that in the event of bankruptcy, the lender may be awarded the property rights, giving Lampert control of those store sites.

•Additional secured financing: ESL lenders provided Sears up to $500 million through a secured letter of credit facility in December, from which Sears has already drawn $200 million. ESL lenders also hold $336 million in secured debt issued to Sears in April through a separate facility and term loan, as well as $300 million in a second lien term loan issued in September. Secured lenders are paid first in bankruptcy.

•Sears Canada: Sears partially spun off its Canadian division in 2012, but Lampert's ESL owns about 45% of the company. That stake was worth nearly $80 million as of Wednesday morning.

•Sears Hometown and Outlet Stores: Sears spun off the franchise in 2012, but ESL retains 57% ownership of the company. That stake was worth about $45 million as of Wednesday morning.

[legion]

Thanks for the info Mark. Even that may backfire on Lampert. Most malls are losing stores and the value of mall real estate is dropping like crazy.

[cstreit]

A lot of the retail difficulty is due to their inability to react fast enough to meet consumer demand of shopping any way they want. Online, mobile, in store, and hybrid. Its a huge challenge that is wrapped up in both business models and technology to support it.

The technology solutions are clambering to keep up as well. Some retailers are doing it well, but it's expensive...and time consuming... THe shakeup is happening, they know it, they're working on it, but the question is, will they change fast enough for the consumer.

How fast does that need to be to stay ahead of the margins? That's the trillion dollar question.

[legion]

I'm pretty sure Sears is still using proprietary terminals from the 70's...

[widebody911]

Found this interesting:

https://np.reddit.com/r/investing/comments/5sqsed/sears_is_crumbling_fun_fact_since_2007_shld_is/?st=j0ob1eb4&sh=92cb55a6